Posted by Frank Chin on January 30, 2001 at 07:50:15:
Dave- you got it exactly right.
We started in Real Estate in the early 80’s. The thinking back then was Real Estate is a good tax write-off. You’ll make money when you sell. Never mind the cash flow.
My wife stayed home since 1995 and took charge of managing several multi-family units. It was OK till the little one came along. Then we settled on below market rents. Yes -turnover went down. We told tenants to take care of things. We let little things go.
I finally realized I’m doing the same thing my 80 year old father is doing. He’s got two stores where he’s charging half of market rent so he won’t have to look for new tenants.
Looking through our portfolio, we have almost 1,000,000 in equity including our home. But, cash flow was less than 20K a year because we were operating as tired landlords. Depreciation is running out and we’ll be paying taxes on the 20K very soon.
I’ve also done well in the stock market. My finanacial planner thought it would be nice to stay in Real Estate as diversification. So I decided to either:
1- Sell everything off- pay the taxes (about 300K), then do rehabs, flips or whatever. This fits into moving out of NYC to a warmer climate. But, we have to find an area of the country where we can do this profitably. Heard from some posts that Ohio is good. But we don’t know how to appraoch this question methodically.
2- Go into larger properties (via 1031) in NYC that can be professionally managed. We started searching since the beginning of the year. We can make 50K to 100K a year based on some of the things we looked at. This way we can still move away.
Yes-I’ve been following this board for ideas for a while for ideas. Based I what I see, people can even make 20K a year with no money and no credit. and based on your posts, Dave, - you’ve done well yourself.
Yes - we’ve decided we cannot afford to be tired landlords anymore. I quit my job to take charge of the transition full time.
And I like to thank you and all the others answering some of my posts.